The Hindu Business Line : Maharashtra Govt to buy entire DPC output at Rs 2.30/unit

CRIPPLED by power shortages of about 3,000 MW, the Maharashtra Government has agreed to buy the entire output of power from Dabhol Power Company (DPC) at Rs 2.30 per unit but it is not likely to flow into the grid for nearly over a yearpossibly more as several pre-revival issues remain to be sorted out.

The coast-based plant near Guhagar built by Enron, Bechtel and General Electric has been in mothballs since May 2001 when the State-owned utility rescinded the power purchase agreement (PPA). At that time, the 695- MW phase 1was operational; the 1,444-MW phase II was almost ready.

The Maharashtra State Electricity Board, while annulling the contract to buy, cited misrepresentation of equipment standards and misleading efficiency claims revealed by poor performance. The MSEB was paying Rs 7 per unit at that time, adversely impinging on its fiscal health. Currently, energy is being bought from other States at Rs 3.15 per unit and more.

A top sourcetold Business Line that, "realistically speaking, we need all the 2,100 MW of power we have offered to buy, right now but we are aware that it would be long before the power flows into the grid. It will take time before the plant is operational again."

The Centre is trying to catalyse the plant's revival and for the first one year it may be operated by the National Thermal Power Corporation, the source said, "before it is put up for bids."

"Prior to that, several issues of the debtors, both domestic and foreign, and the original investors like the GE and Bechtel have to be resolved. At one estimate "it would take between nine months and a year to re-start the plant," once the questions of debts and outstandings are settled and the original investors are satisfied that they have got the best deal and opt out of the now virtually defunct project.

During the tumultuous history of the project, there was a moment when the Maharashtra Government had limited its PPA with DPC to buying power from the first phase alone saying that it adequately met the requirements. Now, all of it is wanted and wanted quickly. However, the commitment to buy all did not come easily and voluntarily from an energy-starved State's administration. Though the Centre has been calling for such an undertaking, it had dillydallied till the the Union Agriculture Minister, Mr Sharad Pawar, publicly rebuked the Government. This spurred a letter sent to the Centre earlier this week.

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